The company run by Andy Puzder, who President Trump has nominated for secretary of labor, ran an illegal wage-fixing scheme for managers at his company’s restaurants, according to a class-action lawsuit filed in California superior court last week.

Puzder is the CEO of the vast Carl Karcher Enterprises (CKE) fast-food chain. One former and one current Carl’s Jr. shift leader allege that franchisees – which Puzder has repeatedly described as independent businesses — colluded with one another to prevent managers from moving between restaurants.

As alleged, the scheme also appears to violate federal law under the Sherman Antitrust Act, as an illegal restraint of trade. That would be a felony punishable by a $1 million fine and up to 10 years in prison for individuals charged.

But the class-action suit filed February 8 in Los Angeles, part of a pattern of alleged labor violations at Carl Karcher Enterprises (CKE) restaurant chains, speaks to the very issues that Puzder would oversee at the Labor Department. Puzder has already proven himself an outspoken critic of the minimum wage, expanded overtime laws and workplace safety rules, and the case charges that under Puzder’s leadership, CKE again violated worker rights.

The lawsuit attempts to show that CKE, which owns the Carl’s Jr., Hardee’s, Green Burrito, and Red Burrito brands, undermined workers’ ability to thrive in the free market that Puzder cherishes so much in public.

Andy Puzder, president of CKE Restaurants, is photographed at a Carls Jr. Restaurant.

Photo: Al Seib/Los Angeles Times/Getty Images

“There’s one system in the history of the world that produces enough economic growth to meaningfully reduce poverty and meaningfully increase opportunity, and that’s free market capitalism,” the lawsuit quotes Puzder as saying in a television appearance.

But franchisees of Carl’s Jr. and Hardee’s deliberately restrict the free market for workers through “no-hire” agreements. CKE franchisees “will not knowingly employ or seek to employ any person then employed by [Carl’s Jr.] or any franchisee of [Carl’s Jr.] as a shift leader or higher, or otherwise directly or indirectly induce such person to leave his or her employment without prior written consent,” according to a preliminary franchising agreement quoted in the lawsuit.

This makes workers unable to threaten to leave for another CKE outlet at a higher wage. Because the CKE system is specialized, and franchisees are encouraged to promote from within, this hampers restaurant managers’ bargaining power. “The market for CKE employees is not free,” the lawsuit states.

The lawsuit cleverly plays on CKE’s insistence that individual franchisees are their own separate entities, in direct competition with one another.

In testimony before Congress, Puzder has said that all CKE franchisees make independent employment and operational decisions. “Our franchisees are not a division, subsidiary, or alter ego of CKE, but are truly independent small businessmen and businesswomen who know how to drive their own business,” Puzder told the House Education and the Workforce Committee in 2014.

CKE’s franchise disclosure agreement states that franchisees do not get an exclusive territory, and “may face competition from other franchisees” or “outlets that we own and/or operate.”

But competing CKE franchises cannot restrict employees from switching job locations to hold down wages. Shift leaders at CKE restaurants, the lowest level of manager, make just $10 an hour on average, according to the lawsuit. Plaintiffs argue that the no-hire agreement suppresses wages and worsens working conditions by drying up the market for CKE restaurant-level managers. “CKE and Puzder cannot have it both ways,” the lawsuit states. “They cannot eschew responsibilities under labor and employment laws by embracing a ‘free market’ model of independent franchisees, while restraining free competition to the detriment of thousands of workers.”

Protesters with NYC Fight for $15 gather in front of a McDonalds to rally against fast food executive Andrew Puzder, who is President Donald Trump’s nomination to lead the Labor Department on Feb, 13, 2017 in New York.

Photo: Spencer Platt/Getty Images

A similar lawsuit was filed against Uber last year, alleging price fixing between its nominally “independent” drivers, which Uber does not classify as employees.

Though filed in state court, the CKE case would apply to federal statutes as well. Section 1 of the Sherman Antitrust Act explicitly prohibits “horizontal” integration, where rival companies within the same sector collude to fix prices or wages. These practices are punished as felonies under federal law. Because CKE, Puzder’s company, is not only a franchisor but a participant in the market — directly owning 30 percent of the more than 3,400 CKE franchises as of 2012 — they would be liable along with the franchisees for wage-fixing.

The Justice Department just issued guidance last October warning of criminal penalties for anti-poaching violations. The state of California, where the lawsuit was filed and where CKE has a high density of franchises, also has criminal statutes against restraint of trade.

Luis Bautista, a Carl’s Jr. shift leader, and Margarita Guerrero, a former shift leader, filed the suit on behalf of all current and former CKE restaurant-level managers. Both allege long and unpredictable hours, heavy responsibilities, “atrocious” working conditions, and broken promises on wage increases. Bautista alleged that the no-hire agreement was common knowledge among shift leaders at CKE restaurants, and that employment applications explicitly asked about prior experience at other CKE franchises.

“Consistent with Puzder’s philosophy and CKE’s structure, the no hire agreement suppresses wages and working conditions to ensure that franchisees make money,” the lawsuit argues. They are seeking a permanent bar on the no hire agreement, along with restitution and damages.

CKE has paid millions of dollars in class-action settlements with its workers in the past. Its executive vice president and general counsel, Charles “Chip” Seigel, responded in a written statement that the lawsuit was “baseless” and “obviously intended to be an attempt, albeit a feeble one, to derail the nomination of Andy Puzder.”

Top photo: Protesters walk to a Hardee’s restaurant during a rally against Andrew Puzder’s nomination for labor secretary near the Hardee’s headquarters on Feb. 13, 2017, in St. Louis.

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Not even taking into account the grammatical travesty (Carl’s Jr what?) – perhaps Mr Putzder (yes, i do know) should live himself live on $400 a week for a bit before he can have any real comment on wages…in fact, all the anti-$15 ought to

Think about it. Wallstreet wants more growth in profits and value every year. That is a demand to push the envelope. Only the most ambitious clever sneaky types will succeed in that and that is a call for ceo operatives who know how to pick fall guys or create such traps. As long as wallstreet is the judge of that beauty contest, AMERICA FAILS.

a word. Patents are 17 years for 2 reasons. It gives the inventor time to earn on his invention and also after that period, it becomes public property to fold itself into the greater society to have and hold as something to stand on for the foundation of a better life. The demands of wallstreet profiteering thieves defeats this type of advancement for all Americans and the lifestyle because wallstreet demand effectively squeeze out those benefits for all Americans by turning long existing institutions into treetaps into the bodies of the public. What benefits America best is private successful enterprises becoming public property for all, not luxury items for wallstreet thieves.

All these $15 per hour advocates are shooting at the wrong target. Demand an end to mass immigration and see your wages rise. Janitor jobs in Los Angeles were, before the flood began, unionized, middle class jobs with which a man could support a family. They were almost entirely black. Today, they are entirely Latino, minimum wage or below, and Spanish language required.

Can you provide concrete evidence with cited studies to support that claim? A lot of people seem to be under the illusion that immigration is the cause of most of the US’ problems. Businesses are the ones hiring foreigners because US citizens are too stupid, lazy, and entitled to do a lot of jobs now a days. I guess you can blame the education system for that if you want. It’s why a lot of science jobs go to H1B holders because US schools are just degree factories without substance. The cost of US children is much more than a foreigner who didn’t grow up like an entitled American. If you have a choice between a spoiled brat who doesn’t give a crap and a foreigner who is willing to do anything to survive, well it’s easy to see who you can exploit. Business will always go for the cheapest labor. Borders don’t matter to them.

I know you think if the borders were controlled it would all be better, but then what about automation? Machines have taken US manufacturing jobs, not foreigners! Will you ban technological progress in the interest of keeping people busy at work? Maybe keep the wages low so everyone has to work more for the same money?

Perhaps people will have to rethink the ideas of work and productivity instead of wishing to turn the clock back to a fantasy land that likely didn’t exist anyway.

Businesses are the ones hiring foreigners because US citizens are too stupid, lazy, and entitled to do a lot of jobs now a days. I guess you can blame the education system for that if you want. It’s why a lot of science jobs go to H1B holders because US schools are just degree factories without substance.

One area of intersection between corporations and the Right, particularly the Christian Right is the idea of a deeply morally corrupted American culture and public institutions. For years, the Right has attacked the very idea of public education, including universities. So corporate America rides this and claims that American universities are inferior (they are not) thus justifying needing cheaper and yes less qualified foreign labor.

Businesses have always and will always continue to keep up whatever narrative benefits them. Right, Left, Center it doesn’t matter. Until people wake up to the fact businesses NEVER have your best interests in mind we will never hold them accountable for their actions. Businesses aren’t people, they’re ideas used to screw people.

The US was built by slaves and the owners never wanted to give them up. They haven’t really given them up. They just changed the shackles. The amazing thing they’ve done now is convince people that being a slave is the best they can do. And that to be successful, you have to pay the cost of admission which turns out to be the debt that keeps you in slavery. If you don’t believe me, look up the cost of MD training (loans, living costs, etc.) to their income after they are residents. I work with these people. They are literally indentured servants to the medical system living barely above poverty. People just like the advertising and the cool toys they have so they just deny the reality.

That’s where the stupidity comes into play. People don’t learn from the past mistakes and just take people on their word, even after they are duped. Being unable to learn from your mistakes is stupid. Remaining willfully ignorant is just stupid. Living in denial is stupid. Plain and simple.

Interesting points about doctors. There seems to be a very high growth of American educated specialists while at the same time, foreign trained doctors are taking up general practice. One pundit claimed the reason for this was that the debts of American doctors was so high, they were forced into higher paying specialist slots just to pay off their student loans. So what happens, there is a shortage of doctors doing general practice, and so the importing of foreign trained doctors.

That is 100% true, but they use the foreign doctors more as cheap subsidies for their greedy business practices. The US can easily afford to pay for its Healthcare system and even offer a single-payer option (Medicare is exactly that, just restricted to the elderly). The thing is, the owners don’t want that. Insurance is legal extortion and they like it that way. They are addicted to $$ and want to see larger numbers every year, and they’re addicted to their perceived power. The owners are ADDICTS. They should be treated as such, yet stupid people continue to revere them.

But yes, many US trained docs go for specialty because you often get paid almost 3x as much for maybe 2 extra years of residency. So a GP makes about 150k a year after a 1-year residency while a Cardiologist makes about 350k for a 3-year residency. Keep in mind most docs graduate with 500k-1mil worth of debt because, guess what? Medical school loans have compounding interest!! So you took out 200k at the start of school and after 4 years of compounding interest… well, ask your doctor how long it took them to “recoup”. Many of them have their stories of living on Ramen while working 80 hour weeks on a salary of 60k a year as a resident. I knew of anesthesiologists who would offer drugs on the side to co-workers and others just to make a few extra dollars. Oh, and by law, MD’s can’t form unions. So, like I said, pretty much slaves.

And that’s just MD’s. It’s a similar situation for lawyers, vets, etc. It’s just an illusion to dupe bright young kids into slavery. Nothing more.

You said “You can fix ignorance, you can’t fix stupid.” Then you said, “The US was built by slaves” which is both ignorant AND stupid.

The US was built despite slavery. Alexis de Tocqueville, in Democracy in America, describes floating down the Ohio River. On one side is slavery, on the other, freedom. On the free side (Ohio) it is a hive of industriousness and economic activity. I.e., “building”. On the other bank (Kentucky), he says, it is like the country is asleep.

The US inherited slavery, which (African) had existed in North America for 300 years by the time we became a country. Within the next hundred years we fought a brutal war to end it–the only time in history that I know of in which a race fought itself for the benefit of another race.

Our history with slavery is glorious. unfortunately, the Weinstein brothers have taught us the opposite to use it as a cudgel against white people.

LOL!! I call a spade a spade. And you didn’t make any points, you were making excuses. That’s what kids do, so you’ll be treated as such. I don’t care about your rationalizations If you don’t like being called a Nazi then stop acting like one.

It’s why a lot of science jobs go to H1B holders because US schools are just degree factories without substance.

To too many liberals “good” education is the solution to all our problems and “bad” education is the cause of all our problems.

The reason tech companies lobby for more H1b is because they are cheaper. Not better. That’s why the Americans they replace frequently have to train their own replacements in order to get their severance pay.

Companies hold the green cards on H1b making them, effectively, indentured servants who are way more flexible in terms of hours worked, not caring too much about overtime, etc. And six twenty-two year old Indians sharing a house are a lot cheaper to maintain than six middle-aged Americans with mortgage payments, and college tuitions to worry about. Not only that, but one of the perks that tech companies can dangle in front of these foreign students is the opportunity to live in America, a big incentive that the debate often over looks. So, hell yeah, they’ll work for less.

In essence, Bill Gates shafts his neighbors, drives down their wages, socializes the costs, and “sells off” the desirability of the United States as a place to live while simultaneously making it less desirable, all while privatizing for himself the profits.

Capitalism as it’s being practiced has and continues to submarine all manner of workers irrespective of their race, in this country and around the globe.

Your ongoing “it’s the immigrants!” dog-whistle doesn’t hold up to the slightest scrutiny in this case, or in any other situation where you’ve put it forth on this site as the reason for societal decline.

“Immigration to the United States increases innovation, slows the aging of the work force and opens new opportunities for some domestic workers. The growing wage gap identified by Professor Borjas may relate to things other than the immigrants’ own qualities — like rising income inequality in the United States.

Critically, those asserting that immigrants bring a contagious decline in productivity have yet to provide any evidence that this has happened, only conjecture. Is there a threshold where further immigration starts doing real damage? How close is the United States to it? What is the mechanism whereby productivity in the United States might be reduced by immigrants’ weaker attributes?

If productivity growth comes from better technology or production capabilities, how could immigrants sap it? If immigrants’ culture affects American productivity — say, by reducing investment or undermining belief in private property — how big would immigration have to be to yield that effect?

Between 1925 and 1965, there was virtually no immigration, and the US built a vast, stable middle class with nothing like the inequality we see today. A tight labor market is the best friend a worker ever had.

Wow. So much omission of context there. It’s like the US existed in a vacuum or something. It’s not like the US rebuilt Europe and Japan after WWII or anything. That couldn’t have affected things at all!

Of course, the top marginal tax rates in that period went as high as 95%, and corporate taxes were high as well…
Also, on what planet did the Braceros program not exist, and where was there no post WWII immigration?

You could also say if the Italians were kept out we wouldn’t have the mafia.

Demand an end to CEOs making 400 times the pay of their average worker; “see your wages rise”.
Demand an end to the bankers skimming 3% of every transaction; “see your wages rise”.
Demand single-payer health care and the importation of affordable medication; “see your wages rise”.
There is a big list of things that would allow you to “see your wages rise”; immigration is a small part.

Immigration is nearly the only part. Simple supply and demand. Meat-packing jobs in the 60s and 70s were unionized high-paying, sought-after jobs. Then the flood started (the meat-packers advertised in Spanish on Mexican radio and sent buses to the border to pick up workers), the unions were busted, and wages plummeted. When Agri-processors, a kosher slaughterhouse in Postville, IA, was raided a few years back, it came out that Guatemalan illegals were started at $4.00 / hour.

There was an interesting report by a labor organizer which I pulled off a service back when 14K modems were all the rage. Sorry has been years and still can’t find the report. But this organizer started working fast food industry in its more earlier days. Here is what he found. The fast food industry work force came to be dominated by undocumented workers, which would be difficult to organize. In the early days, the first generation of workers were part time teenagers. So as these earlier generations grew up, many of them went back to fast food to earn money for college, as a way station until something came up, etc.

This meant salary and hourly pressures and very importantly legal requirements when people worked over time, etc. Well, the fast food industry is built on pliable non-full time workers. An girl friend who once worked at McDonalds said it was not atypical to suddenly announce to workers for them to go home as the demand had slowed down (she was Mexican America).

So in response to these pressures, fast food turned to a pliable work force whose hours and legal rights they can control and ignore–undocumented workers.

Will wages rise due to just “demanding”? If I write more letters to Congress demanding them to end immigration I’ll get a raise?

Words like “mass” and “flood” are keywords from disingenuous propagandists who probably do not even know what the true numbers are regarding immigration, jobs and the economy, or who are deliberately trying to muddle any attempts at meaningful discussion.

The absolutists view is aways skewed and therefore suspect and not to be trusted. Emotionalizing an issue is the first refuge of the scoundrel not interested in accruing knowledge or in participating in debate, but in the miserable interest of stirring up hate and dissension i.e. “trollism”.

Good expose and article. Only comment is that collusion to restrict worker movement and free and open labor markets is rife in all segments of the American work force. A number of large South Bay Silicon Valley high-tech companies who weren’t even competitors were caught in agreeing not to hire each other’s engineers restricting the free of movement for these workers. I know my old company had a loose agreement not to “over hire” from other local high tech companies. A first kissing cousin of these practices is the use of myriad work visas to destroy competitive local labor markets. This happened in Aspen when the demand for resort workers was putting pressure for higher wages. So hotels began importing captive seasonal foreign labor. The use of H1B visas also depresses local wages and destroys the immutable law of supply and demand for labor markets.

Just another way to control and crush American workers in the name of profit and just pure vindictiveness.

You are right about H1b and the abuse of American workers. Pudzer has been an outspoken advocate of amnesty, so, clearly, he has no innate loyalty to American workers. It’s unlikely he would end the massively regressive H1b outrage. Unfortunately, the victims are largely middle-aged or older white men, so… crickets. (The beneficiaries are, too, but the rich old white men are somehow exempt from PC hatreds.)

It is more than just older white workers. The H1B visa program shuts out new college hires including American women and POCs. Large numbers of STEM graduates cannot even find jobs in their areas. But this is predatory capitalism. And it knows no boundaries. I have been reading that in India, older high tech workers are facing threats of elimination and lay off to reduce wages.

This. We can manipulate the racial makeup of the workforce all we want, but without controls on wealth accumulation and better worker protections irrespective of what race or gender you are, it’s still business as usual.